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Internet Advertising

Internet Advertising. e-Business Factoids. By 2000, 30,000 internet businesses Sales: $8 billion in 1998, over $60+ billion in 2003 Profits seen by: 80% of catalog companies, 50% of store business, and 36% of pure internet business Advertising expenditure:

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Internet Advertising

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  1. Internet Advertising

  2. e-Business Factoids • By 2000, 30,000 internet businesses • Sales: • $8 billion in 1998, over $60+ billion in 2003 • Profits seen by: • 80% of catalog companies, 50% of store business, and 36% of pure internet business • Advertising expenditure: • $2.8 billion in 1999, $5.4 billion in 2000, $20 billion in 2004 (8% of total US advertising cost)

  3. Recession • Traditional print and television advertising has declined substantially • Internet and free standing inserts still increasing

  4. Media Usage: 2004-2009 Source: news.cnet.com/8301-1023_3-10297935-93.html

  5. Canada • Over 65% of households have broadband connection • Average time online per week • 1997: 4.8 • 2002: 9.3 • 2005: 11.7 • 2008: 13.8 Source: MTM 2008, www.crtc.gc.ca/eng/publications/reports/PolicyMonitoring/2009/cmr45.htm

  6. Canadian Internet Activities, 2008 Online video Instant messaging Social networking sites Online games Streaming audio Downloading music Posting messages to message board Listening to a podcast Playing online games with others 0 10 20 30 40 50 Past Month Usage (%) Source: MTM 2008, www.crtc.gc.ca/eng/publications/reports/ PolicyMonitoring/2009/cmr45.htm

  7. Canadian Online Advertising • Online advertising in Canada (millions $) • 2004: $364 • 2005: $562 • 2006: $1010 • 2007: $1200 • About 1/3 of total Canadian advertising expenditure • Mobile advertising, $2.7 million (2007)

  8. Canadian Online Purchasing Online Spending of Average Buyer Number of Items Purchased Online 60% 40% 20% 0% 2006 2007 $460 $420 $400 $447 $454 2006 2007 1 2-4 5-10 11+ From E-Commerce and Social Media in 2007: A Canadian Perspective

  9. Europe Online Purchases in 2005 Country Amount Spent Online Average #Items Purchased UK £875 12 Denmark £734 9 Norway £731 7 Belgium £477 4 Netherlands £417 3 Germany £405 10 Sweden £393 5 Spain £355 2 Italy £306 3 France £254 6 From European Interactive Advertising Association

  10. Online Profit: Critical Factors • Site traffic • Costly (up to 50% of total budget on advertising) • Getting initial sales • Surfers to purchasers • Site, product, and consumer characteristics • Securing repeat business • Essential • Brand loyalty

  11. Lynch, Kent & Srinivasan (2001) • Identify factors driving purchase intention and loyalty in web shoppers • 12 countries (N. Am., S. Am., Europe) • Shop for CD player (low touch) and T-shirt (high touch) • 20 minutes searching on internet • Questionnaire • Purchase intention, site loyalty • Site quality, affect, and trustworthiness

  12. N.Am S.Am. Europe Site T-shirt CD T-shirt CD T-shirt CD quality sig n/s n/s n/s n/s n/s affect sig n/s sig sig sig sig trust sig sig sig sig sig sig quality sig n/s n/s n/s n/s n/s affect n/s n/s sig n/s n/s n/s trust sig sig sig n/s sig sig Purchase Intention Site Loyalty Results

  13. Interpretation • Site quality • Important for high touch items • Low-touch business can economize here • Site affect • Necessary for purchase • Positive experience; are you happy? • Trust • Necessary for purchase and loyalty

  14. Internet Ads: Annoyance • Potential problem • Web advertisers should worry • Ducoffe (1996) • Professionals sampled • Web entertaining, ads not annoying • Brackett & Carr (2001) • University students sampled • Web not entertaining • Ads annoying, irritating, and insulting

  15. Is It Worth It? • Rodgers & Chen (2002) • Post-adoption attitudes to internet advertising • 88 top executives • Advertising, public relations, new media, marketing firms • Questionnaire

  16. Results • Advertising execs least favourable • Self-perceived ability to cope with media • Relative advantage and complexity • Generally, internet seen as important advertising innovation

  17. Kwak, Fox, & Zinkhan (2002) • What products sell via the internet? • Who makes internet purchases • What distinguishes internet users who purchase from those who don’t • 307 subjects; from on-line chat server

  18. books computers music low Popularity high of Product education travel internet entertainment communications electronics low Information high Findings • 46% had made on-line purchase • Computer (32%), books (27%), music (20%), travel (15%) • Below 15%: education, communications, electronics, entertainment, internet

  19. Findings • The more time you’re on the internet, the more likely you are to be a purchaser • Positive attitude towards internet ads correlates with purchasing • Mild correlation b/t risk taking & internet purchase • Age and education not too relevant to purchasing • However, Ratchford, Lee & Talukdar (2003) find younger and better educated more likely to use internet to get purchasing information on cars

  20. Interpretation • Internet purchases related to self-generated interests • Unlike TV or radio, internet users can influence what ads/products they are exposed to • Suggests that content ads (informative) may be better than affective ads • Mere exposure to internet ads may not serve to increase purchasing

  21. Decision Making • Difficulty may --> delayed choice • Effort • Physical, mental, financial resources expended • On-line shopping • Variety of differences from traditional shopping

  22. Electronic Decision Aids • Software that • Attempt to understand decision maker’s preference function • Makes recommendations • Vary widely in facilitation ability and function • Is cognitive work load shifted from person to computer?

  23. Bechwati & Xia (2003) • Study 1 • Do consumers perceive electronic aids as exerting effort and saving them effort? • 108 undergrads • No aid, human aid, electronic aid • Job search task

  24. Study 1 Results • No aid users reported most effort expended • No difference between human & electronic aid • Users felt human aid exerted more effort than electronic aid • Both human & electronic aid users felt the aid saved them effort

  25. Study 2 • Job search • Low condition: • “The search engine is searching for the job requested. Please wait.” • Output of four job options • High condition: • “The search engine has already searched 30% of the database and is now going through the remaining 70%.” • Personalized output (user name, location, salary range from search criteria)

  26. Study 2 Results • High condition seen as • More informative • More tailored to the user • More effort saving • More satisfying

  27. Comments • Implications for machine-human interaction • Relatively simple on-line task • Does this generalize to real search functions?

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